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Middle East conflict: How Kiwi hospitality operators can mitigate rising costs

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In our recent article on the Middle East conflict and its impact on hospitality, we outlined the pressures now bearing on hospitality — from rising fuel costs and disrupted shipping routes, to potential international visitor impacts. But while there are some things we can’t control, here are the key strategies to protect your margins right now.

1. Rethink your menu around cost-stable ingredients

Many operators are already committed to buying local. But even with a strong local focus there may be room to push further, particularly when it comes to freight-dependent specialty items.

With imported ingredients potentially becoming less predictable in both price and availability, now is a good moment to audit your menu.

  • Are there imported items that could be swapped for a New Zealand equivalent?
  • Are there seasonal local ingredients you’re not yet making the most of? Leaning further into domestic produce, proteins, and shorter supply chains significantly reduces your exposure to freight volatility.
  • Where you do continue to use imported items, make sure your team understands the cost pressures behind them — portion discipline and waste reduction can become more of a focus when everyone knows what’s at stake.

A tighter menu can help too. Fewer dishes can provide greater agility when costs shift.

2. Supplier relationships and contracts

While you’re feeling the pressure of rising costs or supply uncertainty, your suppliers are likely navigating the same landscape. But in volatile times, your supplier relationships can be one of your greatest assets.

A supplier who knows and values your business will go further for you than one who doesn’t. And the things that build that goodwill are often straightforward, including being a consistent and communicative customer.

It’s also worth having a broader awareness of your supply network — not to move away from valued suppliers, but so that if a specific product becomes unavailable, you’re not caught off guard. A good supplier will often help you think through those contingency options themselves.

3. Reduce food waste relentlessly

It may seem obvious, but waste is money walking out the door — and in a tight margin environment, it’s non-negotiable to address it. Tighten up your inventory management; track what’s being thrown away and why, and adjust ordering accordingly.

Cross-utilise ingredients across multiple dishes to reduce the risk of spoilage. Train your kitchen team on portioning consistency. Even modest improvements in waste reduction can meaningfully improve your bottom line without requiring any price increases.

Get some tips from our Kai Keepers food waste programme insights here.

4. Look hard at energy costs

Fuel prices are up across the board, and that flows through to your energy bills too. An energy audit — even a basic one — often reveals quick wins: inefficient equipment running outside peak hours, refrigeration that needs servicing, or lighting and heating that can be better managed.

If you haven’t already, explore whether your current energy contract is still competitive. In a rising energy cost environment, switching suppliers or locking in a fixed rate may offer useful protection.

RA partner, The Utility Company, will do the work for you – they’ll assess your usage and negotiate better rates on your behalf. Find out more.

5. Adjust pricing thoughtfully

Raising menu prices is uncomfortable, but when you are facing some cost rises yourself absorbing every increase isn’t sustainable.

Rather than across-the-board hikes, consider tiered pricing — protecting your most value-sensitive items while adjusting margins on dishes where diners have more tolerance. Introduce combination offers or lunch specials that deliver perceived value while managing your cost-per-cover. Be honest with your regulars: most people understand the current environment, and transparency builds trust.

6. Pivot marketing toward domestic diners

With international visitor numbers under pressure now is the time to double down on your domestic audience. Kiwi customers may be feeling some impacts themselves right now, but they are still eating out, and with outbound travel more expensive and uncertain, some may be inclined to spend closer to home.

Engage your existing customer base through social media, and create experiences that feel worth the trip — events, themed nights, local collaborations. Strong community connection and word-of-mouth are your most cost-effective marketing tools right now.

Looking further ahead, there is also a potential upside worth watching. Travelers from regions closer to the conflict — or those simply seeking stability and distance from uncertainty — may increasingly look to destinations like New Zealand. We’re geographically remote, politically stable, and an appealing choice for visitors who want to feel well away from global tensions. Be ready to capitalize if this benefit does materialise when those travellers do arrive.

7. Use technology to work smarter

Technology doesn’t have to mean a big capital outlay. Increasingly, accessible tools can help with inventory tracking, demand forecasting, rostering, and reducing the hidden costs of over-ordering or over-staffing. Operators who use data to make decisions are better placed to respond quickly when costs shift.

Global instability is not a new challenge for hospitality — this industry has weathered disruptions before and adapted. The operators who come through in the best shape won’t necessarily be the biggest or best-resourced, but those who move early, stay close to their numbers, and keep their teams and suppliers informed. There’s no single fix, but taken together, the steps outlined here can meaningfully reduce your exposure and keep your business on solid footing while the situation evolves.

Read more:

Middle East Conflict: what it could mean for hospitality

For general information on fuel updates the following links are useful: 

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